Dan Flynn is the writer of The Corn & Ethanol Report, a daily market letter covering grains, energies, and various global issues that are the driving force and backbone of the commodity markets. Contact Mr. Flynn at (312) 264-4374
We kickoff the day with MBA Mortgage Rate, MBA Mortgage Applications, MBA Mortgage Market Index, MBA Purchase Index, and MBA Mortgage Refinance Index at 6:00 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., 10-Year Note Auction at 12:00 P.M., and Dairy Products Sales at 2:00 P.M.
Moody’s downgrade of 10 regional banks and put six other lenders on notice they are under review, the latest blow to an industry still reverberating from the banking crisis that led three firms to collapse. The targeted banks remain vulnerable to nervous depositors, and investors, risk from higher interest rates, and weakening commercial real estate market, Moody’s said. Some of those conditions helped spark the panic this spring that brought down Silicon Valley Bank and Signature Bank, respectively the second and third largest bank failures in US history. The KBW Nasdaq Regional Index closed the day down more than 1%, underperforming the broader market. The Dow Jones Industrial Average and the S&P500 were both down less than 1% We have seen some bank stress test this year but not like we saw in 2008 when it was pretty much a weekly event. If your able the best thing you can do is bite the bullet and do not let your credit out of hand, in this administrations economy.
On The Corn Front the Central US forecast is broadly consistent with prior runs in keeping strong high pressure Ridging aloft to the South Central US into August 18th. A deep low pressure Trough will be anchored aloft South East Canada, and this upper air pattern will promote additional rainfall and lack of extreme heat across the Central Plains and Midwest nearby. Soaking rain will stay erratic and regional in nature, but the EU and GFS agree that needed precipitation worth 1-1 ½ inches will impact Eastern South Dakota, Northern Iowa, and Southern Minnesota from Saturday until Tuesday. There were also hints that rainfall expands across the entire Northwest Corn Belt in a 7 to 10 day period, but confidence is low and the Ridge-riding nature of coming storms. The extended range of 10 to 14 day period does allow for the amplification of high pressure Ridge across the Central US and a few days of extreme heat with highs in the 90’s to lower 100’s. Not a glowing forecast for farmers in dry conditions. We do have other farm news with Dairy Products Sales today, Export Sales tomorrow, but the gamechanger will be the Crop Production USDA Supply/Demand and WASDE data. In the overnight electronic session the December corn is currently trading at 501 ¼ which is 2 ½ cents higher. The trading range has been 502 ¼ to 498. We will see if follow-through continues through the day with Moody’s bank list.
On the Ethanol Front the attorneys general of Iowa and Nebraska sued The Environmental Protection Agency (EPA) on Monday in a bid to compel the agency to allow year-round sale of ethanol heavy fuel blends. In the lawsuit filed in the Southern District of Iowa, Iowa Attorney General Brenna Bird and Nebraska Attorney General Mike Hilger (R) alleged the federal government missed a 90-Day deadline to make a decision on a waiver request from the states to sell E-15fuel year-round, which include 15% ethanol. Seven Midwestern governors, led by Iowa’s Kim Reynolds wrote to the administration in 2022 to ask for year-round sales. The EPA said they approved for 2024. Hello! This was the whole reason you had 90 days to expedite the waivers. Once again the issues the EPA granted is denied by politics. In crisis or issues like the whole administration, they just don’t care. There were no trades or open interest in ethanol futures.
Have An Excellent Trading Day!